We welcome article submissions from experts in the areas of coal, mining,
shipping, etc.
To Submit your article please click here.
|
|
|
Saturday, 11 December 21
BUNKER BUYERS LOSE UP TO $5/MT FOR NOT COVERING ENOUGH SUPPLIERS - INTEGR8 FUELS
With the Brent price recently touching the $80 mark and before the Omicron variant concerns pushed it lower, bunker prices reached levels not seen since early 2020. Following the OPEC+ decision not to release additional crude oil volumes on the market and continuing to add to existing supply gradually, we may see more oil price increases going forward, particularly if Omicron proves to be less deadly as initially thought and given the current tight oil supply and demand balance.
The process of buying bunker fuel is essentially a reverse auction where more participants often mean a better price achieved, which is particularly important in the high oil price environment. In this article, we discuss the reasons and quantify the impact of low supplier coverage and response rate on the price paid and look into the ways to get more suppliers to quote.
More suppliers quoting means lower price paid…
We analysed a sample of over 250 Integr8 Fuels stems fixed so far in 2021 covering the hubs of ARA, Gibralter Straits and Malta which are served by multiple suppliers. For each stem, only the larger quantity fuel was analysed (often VLSFO or HSFO, unless a single LSMGO grade was procured) as supplier coverage in the dual fuel stems often depends on the main larger quantity grade.
Figure 1. shows the relationship between the supplier response rate (the share of suppliers quoting a price in the total number of suppliers) and the average premium or discount paid over the bunker benchmark price provided by ENGINE.
It is evident that, on average, stems with less than 20% of suppliers quoting were fixed at a slight premium to the benchmark, while stems with over 60% of suppliers quoting were fixed at significant discounts, hence having more suppliers’ quotes resulted in an average savings of up to $5/mt. And there are a number of ways to achieve such savings.
To visually represent this, all the stems have been mapped for supplier coverage and response rate with stems falling into three distinct categories (Figure 2.). Around 30% of stems fall into the first category, where both supplier coverage and response rates were low, including most of the stems with one supplier. Stems in this category were on average fixed with a $0.2/mt discount to the ENGINE benchmark price.
Intuitively, an over payment could be expected, however, the small discount was mostly due to a number of large quantity fixtures that usually attract good prices. The stems in the second category, which constitute around 15% of all stems, had good a supplier coverage but a low response rate.These are characterised by their smaller size, shorter lead time and a small discount to the benchmark of $0.3/mt. A lot of these fixtures were done for same day delivery. Lastly, in the third category are the stems with a good supplier coverage and response rate -these on average achieved a much larger discount of $3.4/mt to the benchmark and this is the category where more fixtures should be aiming to be.
Interestingly, we found a number of stems with the high supplier coverage and response rate yet with sizeable over-payments beyond the ENGINE benchmark pricing. The main reason for this was found to be the limitation imposed by some companies in the wake of the IMO2020 change on the acceptable levels of sulphur and viscosity when buying VLSFO. While in some instances such limitations helped to avoid buying fuel that was more likely to test off-spec or cause issues on board vessels, in others this meant that some suppliers offering lower prices were being disqualified on the basis of provisional certificates of quality which were not always representative of the delivered fuel quality. A similar trend was spotted among the minority of stems where a certain spec was requested, for example ISO8217:2017.
Overall, the data shows that increasing the lead time and stem quantity, avoiding out of hours and weekend enquiries, being flexible with the fuel specs where operationally possible and safe to do so, can help increase suppliers’ response and achieve a better price paid. Moving beyond the stem sample analysed, another typical reason for sub-optimal supplier coverage is that some companies only prefer to deal with a limited number of physical suppliers directly.
Traders can help increase supplier coverage
Direct business is often perceived as the only way to achieve low prices as it cuts the middleman from the equation. This does work well for large companies buying substantial volumes of bunkers globally who have the resources to negotiate prices, set up and maintain credit lines with the hundreds of suppliers globally. However, the reality is that a lot of medium and smaller companies may only be dealing with a handful of suppliers directly thus not covering the whole market. This significantly limits their bargaining power. A trader can not only cover the rest of the market but also act as insurance policy should the company’s own credit lines with suppliers become tight, particularly in the rising oil price environment.
Long gone the days when traders were matching sellers with buyers. In recent years, investment has been going into gathering data, setting up systems, news flow and analytics. While receiving quotes and sending back counteroffers to five suppliers may not sound too complex, a trader may have a system that allows to compare supplier quotations on the weighted by fuel grade average price while also considering suppliers’ historical claims, density short lifts, recent quality issues and fuel energy content. These days a trader can not only cover every supplier in the market but also warn about supply delays (as no one wants their $40,000/day earning bulk carrier to go off hire waiting for bunker supplies), worsening weather conditions, help prevent claims, bundle up several enquiries to achieve volume discounts and even help with bunker planning and suggest the most optimal port or combination of ports to bunker your vessel.
Source: Integr8 Fuels
If you believe an article violates your rights or the rights of others, please contact us.
|
|
Thursday, 07 July 22
COAL INDIA'S PRODUCTION SETS RECORD INCREASE OF 29% YOY AT 36 MT IN Q1FY23 - IIFL SECURITIES
Coal India Limited (CIL) has ended April-June quarter FY’23 capping a historic high of 29% yoy output growth, compared to same quarter FY&rsq ...
Wednesday, 06 July 22
MARKET INSIGHT - INTERMODAL
Following the 3rd Decarbonizing Shipping Forum, held in Hamburg on June 2022, there has been a meaningful resurgence of discussions within the ship ...
Tuesday, 05 July 22
WHY ARE VLSFO PRICES SO HIGH, ESPECIALLY IN SINGAPORE? - STEVE CHRISTY, INTEGR8 FUELS
Tightness in products still trumps talks of recession
Last month we wrote about the fears of recession versus the tightness in product markets ...
Tuesday, 05 July 22
ADANI ENTERPRISES LOWEST BIDDER IN COAL INDIA'S IMPORT TENDER: REPORT - BUSINESS STANDARD
Coal India Ltd floated its first import tender on behalf of power companies, where Adani Enterprises Ltd came out to be the lowest bidder, a report ...
Tuesday, 05 July 22
CHINA POLICY KEY FOR IRON ORE OUTLOOK - ING
China’s covid lockdowns and recessionary risks hit iron ore
Iron ore prices have fallen significantly from their year-to-date high of US$ ...
|
|
|
Showing 301 to 305 news of total 6871 |
|
 |
|
|
|
|
| |
|
 |
|
|
| |
|
- Uttam Galva Steels Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Kaltim Prima Coal - Indonesia
- Africa Commodities Group - South Africa
- Coalindo Energy - Indonesia
- Electricity Authority, New Zealand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Georgia Ports Authority, United States
- Jorong Barutama Greston.PT - Indonesia
- Anglo American - United Kingdom
- Eastern Energy - Thailand
- Formosa Plastics Group - Taiwan
- Posco Energy - South Korea
- Karaikal Port Pvt Ltd - India
- Mjunction Services Limited - India
- Parry Sugars Refinery, India
- Videocon Industries ltd - India
- Binh Thuan Hamico - Vietnam
- Toyota Tsusho Corporation, Japan
- Ind-Barath Power Infra Limited - India
- Kideco Jaya Agung - Indonesia
- Indian Oil Corporation Limited
- AsiaOL BioFuels Corp., Philippines
- Madhucon Powers Ltd - India
- Directorate Of Revenue Intelligence - India
- Kumho Petrochemical, South Korea
- Global Coal Blending Company Limited - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Tamil Nadu electricity Board
- Asmin Koalindo Tuhup - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- The University of Queensland
- Indonesian Coal Mining Association
- The Treasury - Australian Government
- The State Trading Corporation of India Ltd
- Meenaskhi Energy Private Limited - India
- Cement Manufacturers Association - India
- Global Business Power Corporation, Philippines
- Borneo Indobara - Indonesia
- Thiess Contractors Indonesia
- Standard Chartered Bank - UAE
- GAC Shipping (India) Pvt Ltd
- Metalloyd Limited - United Kingdom
- PowerSource Philippines DevCo
- Economic Council, Georgia
- Gujarat Sidhee Cement - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- SMC Global Power, Philippines
- Coastal Gujarat Power Limited - India
- Goldman Sachs - Singapore
- Kartika Selabumi Mining - Indonesia
- Wilmar Investment Holdings
- London Commodity Brokers - England
- Meralco Power Generation, Philippines
- Cigading International Bulk Terminal - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Aboitiz Power Corporation - Philippines
- Holcim Trading Pte Ltd - Singapore
- Commonwealth Bank - Australia
- Power Finance Corporation Ltd., India
- Makarim & Taira - Indonesia
- Bayan Resources Tbk. - Indonesia
- Renaissance Capital - South Africa
- SMG Consultants - Indonesia
- Sakthi Sugars Limited - India
- Interocean Group of Companies - India
- Kohat Cement Company Ltd. - Pakistan
- Riau Bara Harum - Indonesia
- Deloitte Consulting - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Manunggal Multi Energi - Indonesia
- Carbofer General Trading SA - India
- Bukit Asam (Persero) Tbk - Indonesia
- Edison Trading Spa - Italy
- Trasteel International SA, Italy
- Independent Power Producers Association of India
- Salva Resources Pvt Ltd - India
- Timah Investasi Mineral - Indoneisa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Essar Steel Hazira Ltd - India
- McConnell Dowell - Australia
- Gujarat Mineral Development Corp Ltd - India
- Larsen & Toubro Limited - India
- Star Paper Mills Limited - India
- Oldendorff Carriers - Singapore
- Iligan Light & Power Inc, Philippines
- Bukit Makmur.PT - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Energy Development Corp, Philippines
- White Energy Company Limited
- Bhoruka Overseas - Indonesia
- Price Waterhouse Coopers - Russia
- Alfred C Toepfer International GmbH - Germany
- Sical Logistics Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Siam City Cement - Thailand
- Barasentosa Lestari - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Orica Mining Services - Indonesia
- Coal and Oil Company - UAE
- Bulk Trading Sa - Switzerland
- Indogreen Group - Indonesia
- Australian Coal Association
- Sree Jayajothi Cements Limited - India
- Ceylon Electricity Board - Sri Lanka
- Semirara Mining Corp, Philippines
- Maheswari Brothers Coal Limited - India
- Mercator Lines Limited - India
- Mintek Dendrill Indonesia
- Marubeni Corporation - India
- Straits Asia Resources Limited - Singapore
- Gujarat Electricity Regulatory Commission - India
- Central Java Power - Indonesia
- Antam Resourcindo - Indonesia
- GVK Power & Infra Limited - India
- Baramulti Group, Indonesia
- Agrawal Coal Company - India
- Semirara Mining and Power Corporation, Philippines
- Vizag Seaport Private Limited - India
- SN Aboitiz Power Inc, Philippines
- Jindal Steel & Power Ltd - India
- Medco Energi Mining Internasional
- OPG Power Generation Pvt Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- New Zealand Coal & Carbon
- ICICI Bank Limited - India
- Samtan Co., Ltd - South Korea
- Tata Chemicals Ltd - India
- Grasim Industreis Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Siam City Cement PLC, Thailand
- Sindya Power Generating Company Private Ltd
- PetroVietnam Power Coal Import and Supply Company
- Bangladesh Power Developement Board
- Attock Cement Pakistan Limited
- Indika Energy - Indonesia
- Eastern Coal Council - USA
- Intertek Mineral Services - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Jaiprakash Power Ventures ltd
- Petrochimia International Co. Ltd.- Taiwan
- Latin American Coal - Colombia
- Banpu Public Company Limited - Thailand
- Sarangani Energy Corporation, Philippines
- Wood Mackenzie - Singapore
- Bukit Baiduri Energy - Indonesia
- Indian Energy Exchange, India
- Xindia Steels Limited - India
- Rio Tinto Coal - Australia
- Maharashtra Electricity Regulatory Commission - India
- Lanco Infratech Ltd - India
- Thai Mozambique Logistica
- Ministry of Finance - Indonesia
- Petron Corporation, Philippines
- Chamber of Mines of South Africa
- Central Electricity Authority - India
- Orica Australia Pty. Ltd.
- Parliament of New Zealand
- Dalmia Cement Bharat India
- Billiton Holdings Pty Ltd - Australia
- Australian Commodity Traders Exchange
- Port Waratah Coal Services - Australia
- Heidelberg Cement - Germany
- GMR Energy Limited - India
- Bhatia International Limited - India
- Pendopo Energi Batubara - Indonesia
- San Jose City I Power Corp, Philippines
- Kepco SPC Power Corporation, Philippines
- Planning Commission, India
- Ministry of Mines - Canada
- Vedanta Resources Plc - India
- Therma Luzon, Inc, Philippines
- Kobexindo Tractors - Indoneisa
- ASAPP Information Group - India
- Chettinad Cement Corporation Ltd - India
- Globalindo Alam Lestari - Indonesia
- Altura Mining Limited, Indonesia
- Sojitz Corporation - Japan
- PNOC Exploration Corporation - Philippines
- LBH Netherlands Bv - Netherlands
- Ambuja Cements Ltd - India
- South Luzon Thermal Energy Corporation
- Aditya Birla Group - India
- Bharathi Cement Corporation - India
- Energy Link Ltd, New Zealand
- Ministry of Transport, Egypt
- GN Power Mariveles Coal Plant, Philippines
- Minerals Council of Australia
- Romanian Commodities Exchange
- IHS Mccloskey Coal Group - USA
- Vijayanagar Sugar Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- Mercuria Energy - Indonesia
- Singapore Mercantile Exchange
- Bhushan Steel Limited - India
- European Bulk Services B.V. - Netherlands
- CIMB Investment Bank - Malaysia
- Indo Tambangraya Megah - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Merrill Lynch Commodities Europe
- CNBM International Corporation - China
- Krishnapatnam Port Company Ltd. - India
- Neyveli Lignite Corporation Ltd, - India
- Simpson Spence & Young - Indonesia
- Malabar Cements Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Savvy Resources Ltd - HongKong
- Rashtriya Ispat Nigam Limited - India
- Electricity Generating Authority of Thailand
- VISA Power Limited - India
- MS Steel International - UAE
- PTC India Limited - India
- IEA Clean Coal Centre - UK
- India Bulls Power Limited - India
- Sinarmas Energy and Mining - Indonesia
- Global Green Power PLC Corporation, Philippines
|
| |
| |
|
